EU formally launches anti-subsidy investigation into Chinese EVs

05 October 2023

The European Union has officially launched an anti-subsidy investigation into electric vehicles imported from China. The move has sparked a wave of opposition from the Chinese government and industry representatives, who view the probe as a protectionist measure.

The European Commission's decision to initiate the investigation stems from concerns that Chinese EVs, which are allegedly benefiting from state subsidies, are entering the European market at artificially low prices. This, the EU argues, poses a threat to its own EV industry.

China's commerce ministry expressed its "strong dissatisfaction" with the investigation, arguing that it lacks sufficient evidence and does not align with World Trade Organization (WTO) rules. The ministry also highlighted the EU's brief consultation period and its failure to provide adequate consultation materials, which, according to them, violates China's rights.

The China Association of Automobile Manufacturers (CAAM) echoed these sentiments, labeling the probe as an "obvious act of protectionism." The association emphasized that China's EV market is highly competitive and not shielded by subsidies. They warned that the EU's actions could disrupt the global automotive supply chain and slow down the worldwide development of the EV industry.

Interestingly, the European Commission initiated the investigation without a formal complaint from the EU industry. However, they claim to have gathered enough evidence suggesting that the influx of low-priced, subsidized EVs from China could harm the EU's EV sector.

The data paints a telling picture. The Commission noted that China's share of EVs sold in Europe has climbed to 8% and could potentially hit 15% by 2025. They believe that Chinese producers are benefiting from various forms of subsidies, including grants, preferential loans from state-owned banks, tax cuts, and rebates. These subsidies, the EU believes, have enabled a surge of cheap imports into Europe.

The investigation is set to conclude within 13 months. If the Commission finds legal grounds, provisional anti-subsidy duties could be imposed within nine months of the investigation's initiation.

But here's a twist: amidst this trade tension, there's a call for collaboration. The CAAM emphasized that the Chinese and European automotive industries should be partners, not adversaries. They believe that the growth of the automotive sector relies on fair competition, not protectionist measures. The association expressed its willingness to engage in dialogue with the EU industry to address mutual concerns and foster cooperative development.

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